Token Description & Project Background

Liquity, similar to MakerDAO, is a lending and borrowing protocol that enables users to acquire loans in the form of Liquity’s stablecoin, LUSD, by collateralizing their assets. It differs from primary competitors such as MakerDAO, in that Liquity loans come with a 0% interest rate, instead imposing a fee for loan creation. 

The platform’s native token, LQTY, serves purposes such as staking and incentivizing front-end operators. Upon the mainnet launch in April 2021, LQTY tokens were distributed to early adopters as a means of encouraging participation. The launch proved to be highly successful, with the protocol quickly amassing a total value locked of US$1 billion within a few days. 

Liquity was founded by Robert Lauko, who holds a Ph.D. in law from the University of Zurich. Lauko previously served as a researcher at DFINITY, a non-profit organization based in Zurich that focuses on developing technology for the Internet Computer network. 

Risks of LQTY

Like an investment in other crypto assets, there are some general risks to investing in LQTY. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in LQTY is subject to the following specific risks:

• LQTY operates using smart contracts, which have an association with vulnerabilities and security breaches. Despite undergoing successful audits by well-regarded third-party entities, it is essential to acknowledge the existence of inherent risks. 

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with LQTY. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The LQTY community and the aforementioned founders are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of LQTY have no recourse to LQTY community, founders, or Uphold if LQTY declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing LQTY on the Uphold Platform, Uphold performed due diligence on LQTY and determined that LQTY is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of LQTY, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community. 
• The supply, demand, maturity, utility, and liquidity of LQTY.
• Any marketing materials put forward by the LQTY social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with LQTY, including any code defects, security breaches and other threats concerning LQTY and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with LQTY, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of LQTY. 

General

Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Uphold users should read the Risks Specific To Holding Digital Assets statement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.  

Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following link. Please also review the Uphold Canada – Crypto Risk Statement for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and Risks Specific To Holding Digital Assets statement. 

Last updated on June 21, 2023.